100,000 carbon offsets trade for $11 each in California

100,000 carbon offset credits for use in the California market traded this past week at a price of $11 per tonne.

Each carbon offset represents one metric tonne of emissions reductions generated from one of four project protocols approved by the California Air Resources Board (ARB).

Under the California carbon market, regulated emitters will be able to purchase carbon offset credits to meet up to 8% of their compliance obligation, creating a potential demand for over 200 million offsets by 2020.

However with only four approved project types-Forestry, Urban Forestry, Agricultural Methane Capture, and the Destruction of Ozone Depleting Substances (ODS)-there could be a significant shortfall in the supply of carbon offsets.

A recent study conducted by the American Carbon Reserve (ACR) predicted that the available supply of carbon offsets could fall 29% short of demand in the first two-year compliance period that runs from 2013 to 2014.

During later market phases the offset supply could be further strained. The ACR report forecasts a 67% shortfall for carbon offsets in California’s final compliance period that runs from 2018 to 2020.